Oil settles up 2% on strong US data, China reopening
OIL prices rose about 2 per cent on Thursday on expectations that global demand will strengthen as top oil importer China reopens its economy and on positive US economic data.
Brent futures rose US$1.35, or 1.6 per cent, to settle at US$87.47 a barrel, while US West Texas Intermediate (WTI) crude rose 86 cents, or 1.1 per cent, to settle at US$81.01.
The US economy grew faster than expected in the fourth quarter, but a measure of domestic demand rose at its slowest pace in 2-1/2 years, reflecting higher borrowing costs.
“Crude prices got an unexpected boost from a US economy that doesn’t want to break,” said Edward Moya, senior market analyst at data and analytics firm Oanda.
US crude inventories edged up by 533,000 barrels to 448.5 million barrels in the week ending Jan 20, the Energy Information Administration (EIA) said.
That was short of forecasts for a 1 million barrel rise, though the EIA says crude stocks are at their highest since June 2021.
China has been easing stringent Covid-19 restrictions this month, with Beijing reopening borders for the first time in three years.
“China’s reopening is supporting demand prospects,” said UBS analyst Giovanni Staunovo.
“Also, market participants are closely tracking the upcoming Opec+ JMMC (Joint Ministerial Monitoring Committee) meeting and the EU (European Union) embargo on refined products,” Staunovo said.
The Organization of the Petroleum Exporting Countries (Opec) and their allies, including Russia, are collectively known as Opec+.
The Opec+ ministerial panel meeting on Feb 1 is likely to endorse the oil producer group’s current output levels, Opec+ sources said.
Global economic growth is forecast to barely move above 2 per cent this year, a Reuters poll of economists showed, suggesting a further downgrade is possible. That was at odds with widespread optimism in markets since the beginning of the year. REUTERS
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